Energy Flexibility Management: Are Energy Providers Prepared for the Real-Time Revolution?

July 5, 2024
When guarantees of origin for electricity were established in 2012 and purchase obligations in 2000 (law no. 2000-108 of February 10, 2000), the goal set by the states was to promote the production of renewable energy. This resulted in providing consumers with a guarantee that the energy they buy is largely produced from renewable sources. Two decades later, these mechanisms that have enabled the growth of renewable energies are showing their limits.

As Maxence Cordiez explains in an article for the Institut Montaigne, this system suffers from two flaws, temporal and spatial. Temporal discrepancies occur because the guarantees of origin are valid for extended periods, creating a disconnect with the actual real-time electricity consumption. For example, they are valid for a month in a country like France, sometimes even longer in other European countries, while electricity is transmitted and consumed in real-time by the final customer. The second flow of the system is spatial. A European consumer can use electricity labeled "renewable" thanks to guarantees of origin produced in a foreign country, including countries not physically connected to our network. Thus, a French or Italian electricity consumer can be officially supplied in the middle of the night by an Icelandic solar panel.

How can we avoid such absurdities and better align the physical exchange between energy consumed and energy produced, and therefore stay aligned to the true goal: to promote the production of renewable energy? In his article, Maxence Cordiez advocates for taking the guarantees of origin system one step further, by transforming it into an effective tool for decarbonizing the European energy mix. A key proposal is to reduce the validity duration of guarantees to one hour. This reduction will bring the guarantees of origin market closer to the real-time production of renewable energy.

This topic of guarantees of origin highlights the growing interest in an increasingly reactive energy market. In recent years, sector players have faced numerous changes: from deregulation to decarbonisation and digitalisation. Today, energy providers must once again transform and adapt to a new need that will shake up the sector: the shift to real-time. This new upheaval will have a significant impact on their information systems and their relationship with customers.

Towards more flexible energy consumption

Analysts predict the widespread adoption of flexible electricity usage in the energy market within the next four years. To be ready, sector players face the urgency to modernize their information systems to be able to enter the era of real-time event management. A real-time operating model is now a prerequisite for integrating flexibility into the energy economic framework.

Like many other sector players, RTE considers the implementation of innovative technologies enabling energy usage flexibility as essential for achieving carbon neutrality. Energy consumers play a central role in achieving flexible energy usage by adapting how and when they use electricity. Therefore, the ability to offer demand-side flexibility is one of the most effective solutions to support the energy transition. According to Carbone 4, flexibility or load-shedding occurs when a user decides to consume only part of the subscribed electrical power during a given time slot. Flexible energy usage touches many actors in the energy market: transmission network operators trying to "direct" electricity flows to meet all needs, electricity producers wanting to sell their electricity at any preferred time, and energy suppliers wanting to offer the final customer opportunities to benefit from more competitive energy prices.  Furthermore, flexibility facilitates overall savings by aligning electricity usage with periods of abundant, low-cost renewable generation and reducing the need for costly grid upgrades to handle demand peaks.

Preserving electrical infrastructures: a growing challenge

With the continuous rise in electrification uses, such as electric vehicles and heat pumps, the European electrical system is experiencing increasing loads on its network, particularly during peak consumption periods. It is therefore necessary to increase the electricity supply with investments in renewable and decarbonised capacities but also to adapt the demand to stabilise electrical networks and limit fluctuations. The adoption of flexible energy consumption aids in stabilising the network. By shifting their consumption patterns, end users help reduce stress on the network and smooth out energy usage throughout the day. Achieving these transformations requires increasingly precise real-time flow management for network operators and energy suppliers to raise awareness among their customers and provide them with the means to act and benefit.

Solutions to overcome these challenges

The first step to addressing these challenges is raising customer awareness and encouraging them to use energy differently. Many attempts have already been made to implement solutions with varying degrees of success and results. For example:

Energy Consumption Reports: Providing detailed energy consumption reports increases visibility for end-users, helping them identify when they use the most energy and how they can adjust their habits to be more economical.

Billing Cycle Flexibility: Enabling customers to select billing cycles that align with their consumption habits, such as opting for monthly instead of annual billing, to provide greater transparency and control over their energy expenses.

Real-Time Consumption Alerts: Implementing real-time alerts via mobile apps or SMS to inform customers when electricity prices are low or high, or when electricity is highly carbon-intensive, will help them adjust their consumption accordingly.

Gamification: Introducing gamification techniques that reward customers with points or incentives for reducing their energy consumption during peak hours.

One of the most advanced methods to encourage consumers to adopt flexibility is "Load-curve invoicing" or "time-of-use pricing," which involves setting different energy prices depending on the time of day and related demand. Currently, the price per kilowatt-hour that the end customer consumes is correlated to the Spot price, i.e., the wholesale electricity market price in Europe. This means that the price the end-user pays fluctuates based on the supply and demand for electricity on the market. This volatility can be confusing for consumers and may lead to sudden increases in their bills.

Load-curve invoicing enhances consumer awareness of the true costs of energy. By incentivising this dynamic pricing model, customers are encouraged to manage their consumption more efficiently, adapt to price fluctuations, and shift their energy usage to periods when the price is lower, as it is illustrated in this article.

What role can energy suppliers play?

Once customers grasp the benefits of flexible electricity usage on their energy bill, the next step is to provide them with solutions to enable them to optimise their consumption. Energy suppliers, as key customer touchpoints, must position themselves as partners and active force in promoting energy consumption flexibility. The Council of Economic Analysis (CEA) states that "appropriate equipment for active energy consumers will be necessary to organize this market, installed by traditional suppliers or new innovative suppliers." We can already observe actors on the market specialising in flexibility and offering solutions directly to consumers. To retain their customers and prevent them from turning to other actors, energy suppliers must swiftly develop and offer their own innovative solutions.

To enter this new market, information systems traditionally used by suppliers are often inadequate. Suppliers need solutions that allow them to gain flexibility and responsiveness, both to control usage load-shedding and to communicate effectively with their customers.

How can triPica help energy suppliers transition to flexible electricity usage?

triPica is THE monetisation platform that empowers telecom operators and energy retailers to deploy innovative business models that combine tailored customer experiences with efficient resource use.  

Today, it is the only IT solution on the market operating in real-time while powered by rich AI features for customer service and business processes automation, making triPica the most relevant choice for energy providers wanting to develop flexible energy offers and billing. It also enables energy providers to efficiently respond to their customers' needs, offering a seamless, fast, and real-time experience.  Built on open APIs and making valuable data, such a enrgy usage patterns and customer needs and preferences, available via data lake, triPica ensures seamless integration with external partners, fostering and working seamlessly in an ecosystem of solutions for flexible energy usage.

When integrated with a retailer’s own distributed energy resource management solution or that of our partners, triPica’s subscription and billing platform built for the future, provides the perfect complement to encourage energy customers to embrace the energy transition journey.

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